How Non-Rich People Can Graduate College Without Crippling Debt

A roadmap.

Jan 8, 2014 at 12:04PM


I can't count how many roundtable discussions I've heard asking whether college is still worth the cost. They are important debates; college can be expensive. But most leave out an important point: There is more than one way to go to college.

I graduated college in 2008, and think I have a pretty good grasp of the challenges today's new grads face. The biggest reason I see so many young people getting frustrated with college isn't necessarily the cost. It's that they're doing college wrong. 

Tradition says you graduate high school at age 18 and head straight to a university. I've found that less than 30% of 18-year-olds are emotionally prepared for college, and a smaller percentage have a reasonable idea about what they want to do for a career.

This sets legions of new students on a devastating path: Start college at age 18 studying your childhood dream. Change your major at age 19 when you realize it requires too much math. Change it again at age 20 when you encounter a mean professor, and once more at 21 to match your boyfriend's class schedule. Eventually stick with a major at 23, graduate at 24, and at 26, finally figure out what you really want to do for a career, which invariably has no relation to your degree. 

I see this over and over again. In the end, college becomes a six-year self-discovery journey -- a worthy cause, but not one most people can afford to spend tens of thousands of dollars on.

The other problem I see in the "is college worth it?" debate is that all schools are lumped into one category called "college." That's wrong. There are four types of undergraduate colleges in America:

  • Community/junior
  • State four-year
  • Private four-year
  • For-profit

These are very different institutions offering very different services at wildly different prices. Picking which one is right for you -- or mixing and matching at the right times -- is one of the most important decisions you'll make in your college career.

I can't offer individual advice, because everyone has different goals, backgrounds, and financial means. What worked for me might not work for you, and what works for you might not work for someone else.

But if I had to come up with a blanket college plan for the average non-rich American graduating high school, it would look like this.

1. Don't start college right away. Get a job and see what the real world looks like.
One of life's cruel ironies is that people's confidence in how well they think they understand the world peaks at age 18. Eighteen-year-olds are unshakably certain about what they want out of life, what kind of career they want, and how they plan on getting there. Some truly have this down; most don't. I can count on one hand the number of 18-year-olds I've met who were ready to make rational decisions about their career path. 

So, after you graduate high school, get a job. It'll probably be low pay for menial, boring work. That's fine. You're young. See what working 40 hours a week feels like. See what paying bills feels like. Learn what dealing with a boss is like, how to talk to customers, how to file taxes, and what your co-workers' lives are like. Take a road trip. You'll learn more than you can imagine doing this. Do it for a couple years, and the combination of aging and working will give you a better sense of what you want to do for a career than you had when you were 18.

2. Go to a community college for two years
No matter what you major in, you're going to need a bunch of general-ed requirements -- a course in basic writing, some level of math, natural sciences, humanities, and maybe a foreign language. 

Get these out of the way at an accredited local community college. Most offer an adequate level of education at a rock-bottom price. Take Orange Coast College, one of the largest community colleges in California. Classes cost $46 per credit, which is less than $150 for a typical semester-long class. A full courseload will set you back $750 per semester -- let's call it $2,500 a year with books and other fees (this varies by state). Maybe you still need to borrow for this. That's fine; it's still a fraction of the cost of four-year schools.

Keep working throughout this period. I heard so many people say, "I can't work and go to school at the same time." Yes, you can. What you can't do is work, go to school, and have the social life of Paris Hilton. You might have to stay up late studying and wake up early to go to work. Welcome to the real world. The 20-year-old you who borrows tens of thousands of dollars to play beer pong five hours a day is despised by the 30-year-old you who has to accept a horrible job to pay it back. 

3. Transfer to a state college
Once you have a real-world sense of what you want to do for a career, transfer to a state college to finish your degree. I found transfer students had a stigma, which made no sense to me; they were often the most responsible and prepared students I met. And no one looking at your resume ever needs to know you transferred. If you go to a community college for two years and then transfer to UCLA, your diploma will be from UCLA.

Most states have public universities that offer first-class educations at a fraction the price of private schools. Private schools can be wonderful if you have rich parents or a scholarship. For everyone else, grasp reality with both hands. For reasons I don't fully comprehend, the same people who understand why they can't afford a Ferrari think it's reasonable to attend Swarthmore. Accepting the reality of your financial situation will save you tens of thousands of dollars. 

Pick a degree that you are both interested in and can provide the income you desire to be happy. If I picked a major based solely on what I found the most interesting, I would have studied military history or something. But there's not much hope for a career in that field, so I chose a major I found interesting and (I hoped) offered marketable job skills. This isn't abandoning your dream. I read a lot of military history books today. But one of the main reasons people think college isn't worth the cost is because they major in something they find fascinating (or easy), but that ultimately makes them no more employable than when they began. That's an expensive choice.

Keep working during this period. Network like crazy, and intern in whatever field you're heading into. You're about to enter one of the most competitive job markets of all time. Find a way to set yourself apart. 

Maybe you disagree with all of this. That's fine -- this is just my perspective. But most people should be able to follow a similar path and obtain a bachelor's degree without a crippling debt load. When I hear horror stories about people graduating college with $120,000 in debt, I think two things: 1) That's unfortunate, and 2) you did it wrong.

Good luck. 

No Pitch

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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